infringement. In StreamCast’s view, even if it distributed peer-to-peer software with the intent
for it to be used for infringement, liability would not attach unless it took further actions, such as
offering instructions on infringing use, that actually caused specific acts of infringement.
StreamCast devoted much energy to arguing that the plaintiffs had failed to prove the second and
third elements of its proposed test.^1952
The district court rejected StreamCast’s argument, finding it contrary to the following
language from the Supreme Court’s decision:
It is not only that encouraging a particular consumer to infringe a copyright can
give rise to secondary liability for the infringement that results. Inducement
liability goes beyond that, and the distribution of a product can itself give rise to
liability where evidence shows that the distributor intended and encouraged the
product to be used to infringe. In such a case, the culpable conduct is not merely
the encouragement of infringement but also the distribution of the tool intended
for infringing use.^1953From this passage, the district court went on to conclude, “Thus, Plaintiffs need not prove
that StreamCast undertook specific actions, beyond product distribution, that caused specific acts
of infringement. Instead, Plaintiffs need prove only that StreamCast distributed the product with
the intent to encourage infringement.”^1954 Although not entirely clear, it appears that in the
district court’s view, as long as a defendant has a subjective intent to encourage infringement, the
mere distribution of a product that is used by others to commit infringement is sufficient to make
the distributor of the product secondarily liable. Such a rule, however, appears to be inconsistent
with the Supreme Court’s ruling. In the passage quoted by the district court, the Supreme Court
stated that “distribution of a product can itself give rise to liability where evidence shows that the
distributor intended and encouraged the product to be used to infringe.”^1955 The use of the
conjunctive “and” followed by a requirement of encouraging a product to be used to infringe
suggests that the Supreme Court did not view distribution of a product alone, coupled with a
subjective intent on the part of the distributor to encourage infringement, would be sufficient for
inducement liability. Rather, the distributor must in addition take actions that encourage the
product to be used to infringe. Although the facts of the case, as elaborated below, seem
sufficient to establish StreamCast’s liability under either rule, the district court’s articulation of
the rule seems broader than, and therefore contrary to, the Supreme Court’s Grokster ruling.
In any event, following the outline of the Supreme Court’s analysis, the district court
found a sufficient basis for inducement liability on the part of StreamCast based upon the
following facts:
(^1952) Id. at 984.
(^1953) Id. at 984-85 (quoting Grokster, 545 U.S. at 940 n.13).
(^1954) 454 F. Supp. 2d at 985.
(^1955) Grokster, 545 U.S. at 940 n.13 (emphasis added).